This paper discusses how to design an inter-area oscillations damping controller using a frequency-shaped optimal output feedback control approach. This control approach was chosen because inter-area oscillations occur at a particular frequency range, from 0.2 to 1 Hz, which is the interval the control action must be prioritized. This paper shows that using only the filter for the system states can sufficiently damp the system modes. In addition, the paper shows that the filter for the input can be adjusted to provide primary frequency regulation to the system with no effect to the desired damping control action. Time domain simulations of a power system with a set of controllable power injection devices are presented to show the effectiveness of the designed controller.